Erik Hagar, CFA

The U.S. Govt taking equity stakes in the most overvalued US stock mkt in history is the definition of “dumb money”-due to nonstop govt intervention since the GFC, the U.S. stock mkt has gone straight up since ‘08, this intervention will mark the top in mkts & a lost decade ahead

Note sent to clients. Overall macro synthesis and update based on war related conditions impact and pricing. What we are doing about it is for clients only. Based on all things happening in the world my macro view is mostly unchanged since writing the "A Hamburger Today"DSR 11/17/26 (available in comments) The major themes remain in place 1. There is a tremendous overhang of issuance in IPO markets, corporate debt markets, and government deficit funding markets. Share repurchases demand is falling. 2. Asset prices particularly bond steepness and risk premium are inadequate to generate the sort of returns to have commercial banks create money which means all issuance mentioned above will compete with existing private sector assets to create the necessary credit without banks creating money. 3. At the same time as supply of assets is increasing without money creation consumers are NOT seeing wage growth anymore to continue to spend and have maintained consumption at elevated levels by dissaving. That dissaving adds to the supply that those with cash can choose from to buy 4. Spending on AI despite its increasingly optimistic outlook for future impact is no longer being tolerated by investors who are asking when those spending on chips and data centers will generate return from those spending on AI models. Those spending on AI models (real disrupted businesses and real consumers) have yet to cut jobs much Prior to the war that led us to the idea that assets in general had to reprice cheaper (risk premium expansion) that has been playing out lately but seems less to do with the above and more to do with the war but it's likely that under the hood the damage of the above has begun to seep into markets and the economy. Prior to the war the RISK to my thesis was 1. Significant sustained reversal on tariffs which would be pro growth and favor equities over bonds 2. AI both generating ROI AND not hitting jobs much 3. QRA and FED manipulation to depress risk premiums 4. Much more rate cuts done by a Trump controlled fed 5. While I couldn't see how Congress could do fiscal stimulus particularly post scotus tariff revenue hit another debt busting tax cut could make me wrong What's changed since the war. 1. Consumption is further challenged by likely elevated energy prices for the next year AND by negative wealth effect which discourages dissaving 2. Ignoring what CB's will do markets have increased short term rates which is a tightening 3. Central banks have broadly and by bank pivoted from dovish to pause or pause to hike (hawkish pivot) sensibly waiting to see the real slowdown while obviously immediately seeing the inflation spike 4. More issuance and asset selling due to the literal waste of setting money on fire due to war has been piled on the already massive pile of asset overhang 5. Despite all manner of negative growth shocks I saw and now see even more bond yields have risen and risk premiums have expanded which is an almost certain to guarantee a marked real slowdown. 6. The mechanics of a dollar squeeze are clear to most and dollar has bounced and ROW assets are being puked after a massive move BUT the conditions for the dollar have perhaps NEVER been worse and the secular get out trade is once again supported by cheaper risk parity in ROW which if and when hostilities tame will snap back with a vengeance. Given my synthesis, now we look to what's priced in. Risk premiums are medium wider but not wide. Adjacent to risk premium markets like asset vols, correlations, swap spreads and credit spreads are medium wider but NOT wide From a pure synthesis of all these things long term treasuries are still NOT cheap enough to be max levered long in both alpha and beta BUT they are far more interesting than equities. My synthesis above is clearly STILL bearish growth, margins, and equities. The above is bearish all but cash but most bearish equities. It is also extremely bearish USD and by definition somewhat bullish gold.

Banks Quietly Loaded Up on Private Credit Risk. The Cycle Is Now Turning prn.to/410x13V | Next week we talk about the rest of the story that Wall Street is hiding. Private everything looks to be the biggest bust since 2008.... @DailyReckoning |

@NickTimiraos The Fed’s biggest fears have always been: when does reckless govt deficit spending permanently push up inflation, when does it no longer become possible for the BLS to reweigh the CPI to hide real inflation, when does bloated govt hiring fail to hide the true employment picture

The Fed’s biggest fear has always been having to choose between fighting inflation and protecting jobs. Friday’s employment report brought that dilemma a step closer. “Let’s not overreact to one month’s numbers, but an environment in which inflation is rising and the unemployment rate is also rising, that’s not any fun for the central bank,” said Chicago Fed President Austan Goolsbee. wsj.com/economy/centra…

Block cut 50% of its workforce Morgan Stanley cut 3% of its workforce Verizon cut 13,000 jobs Amazon cut 16,000 jobs Insiders say Oracle will cut +30,000 jobs The dominoes are falling...

@FirstSquawk government painting the tape - intolerance for a down day in risk assets

WHITE HOUSE ECONOMIC ADVISER HASSETT SAYS ON REDEMPTIONS: SEEING NOTHING LIKE 2008

@SlopeOfHope redundant in British

WAYS TO SAY YOU'VE BEEN FIRED ------------------------------------- 1940s: "I got 86'd" 1950s: "They gave me a pink slip." 1970s: "I got canned." 1990s: "I've been right-sized." 2026: "I've just been made the Special Envoy for The Shield of the Americas."

@bluewolfpack1 back at you & your sons - cheers

@erikhagar Sending love ❤️

This is going to get ugly and Fck yes about time . Let’s dance baby 💋

@bluewolfpack1 yes & good: kids, health & business - we are on the same page - best

@erikhagar Still on the dance floor . Won’t leave until I nail the crash . Other than that just focus on my sons. All good 🤙

@bluewolfpack1 all healthy & good here - thanks for asking - took a step back from the government intervention in markets - how are you sir?

@erikhagar Refuse to watch . How are you Erik - been a minute .

woof BlackRock Slashes Another Private Loan Value From 100 to Zero

On February 17, 2026, the Federal Reserve stepped in and pumped $18.5 billion straight into the banking system through its Treasury repo operations. They'll spin it as routine, everyday plumbing...just normal open market operations to keep things flowing smoothly.But let's call it what it really is: a massive, emergency-style liquidity shot into a banking sector that's showing fresh signs of strain beneath the surface. This isn't some minor tweak; it's the Fed quietly backstopping the system to prevent short-term funding markets from seizing up, especially after QT officially wrapped late last year and amid ongoing volatility in money markets. Recent repo facility usage has spiked multiple times (hitting records late 2025), and this $18.5B injection fits the pattern of the central bank having to intervene when liquidity gets tight..whether from quarter-end pressures, balance sheet adjustments, or deeper stresses in the financial plumbing. The official line? "Business as usual." The reality? The banks needed a bailout-level boost to stay afloat overnight. Keep your eyes on SOFR rates, reverse repo flows, and any uptick in standing repo facility borrowing these quiet injections often precede bigger cracks. Your truly, The Great Martis.✨

@st_sinjun the usual Wall Street banks that run the Federal Reserve & Wall Street guys in the US Treasury & Federal Government

@erikhagar Who will decide who get's bailed out?

Nonstop bailouts in the U.S. will be rising sharply due to bankruptcies

@dampedspring Nonstop Government Market Intervention since the 2007-2009 Great Financial Crisis

On Jan 8th Trump ordered the GSE's to begin buying 200BN in MBS. The impact was immediate as MBS spreads collapsed. What was not known and probably not expected was whether the GSE's would hedge the accumulated duration which make the purchases neutral to the treasury market and which would be consistent with their multi year policy of managing their duration gap to zero. OR would they buy the MBS unhedged and financed with short term issuance. In that case the Trump order would surpress the 10 year and YES would be akin to QE! In yesterday's earnings release FNM disclosed a non zero duration gap for the fourth quarter. So even before the Trump order they were taking on duration risk buy some combination of mortgage purchases and hedge unwinds. We will see but it seems more likely than when the order was originally announced that the Trump administration is manipulating the 10 year note and effecting monetary policy.

Government Market Intervention every day since the 2007-2009 Great Financial Crisis

Who's lying here?

Silver crashes 35%… JP Morgan covers shorts at the EXACT bottom. Ai Asian Guy explains why this wasn’t panic, it was positioning. Banks don’t lose control by accident. #Silver #JPmorgan #COMEX #SilverSqueeze #KWYH